After slipping for the past two weeks, bank loans have gone up by Rs 10,446 crore in the fortnight ended February 13, taking outstanding advances to Rs 26,46,783 crore, according to data released by the Reserve Bank of India (RBI) on Wednesday.
Credit rose 19.55%, or by Rs 4,32,764 crore, in the 12 months through February 13, while total bank deposits have risen by 21.4%, or Rs 6,49,959 crore, in the same period to Rs 36,85,972 crore.
In the two weeks ended January 30, bank loans had fallen by Rs 8,822 crore, thereby reducing outstanding advances to Rs 26,36,338 crore, according to the central bank.
Loans to industry and consumers dropped by Rs 4,648 crore during this period, while food credit dropped Rs 4,175 crore, the RBI said.
Credit rose 19.3%, or by Rs 4,26,021 crore, in the 12 months through January 30. Total bank deposits rose by 18.7%, or Rs 5,77,091 crore, in the same period to Rs 36,68,801 crore.
Since October 2008, the central bank has slashed the cash reserve ratio (CRR) by a good 400 bps from 9% in October 2008 to 5% in January 2009. Statutory liquidity ratio has been reduced by 100 bps, from 25% to 24% in November 2008. Nevertheless, the RBI also pumped in Rs 2 lakh crore into the banking system. In view of a lower interest rate regime, the central bank also cut the repo rate by 350 bps from 9% in October 2008 to 5.5% in January 2009.
Bank loans fell by Rs 13,840 crore in the two weeks ended January 16, raising outstanding advances to Rs 2,650 lakh crore, according to the central bank. Credit rose by 22.1%, or by Rs 4,79,597 crore, in the 12 months through January 16. Total bank deposits rose by 20%, or Rs 6,05,816 crore, in the same period to Rs 36,30,079 crore.
Going forward, Abheek Barua, chief economist with HDFC Bank, said with inflationary pressures easing and firms paring financing demand as they run down inventories, credit growth is likely to moderate further. ?Although credit disbursals have been slow due to tightening lending conditions and management of rising credit risk, credit off-take is as much a problem of demand as it is of supply,? he said.
Export-oriented sectors like textiles, which contribute to about 11% of bank credit and gems and jewellery industry, which contribute 3% of bank credit with auto ancillary and IT, have been affected greatly.
